thinking: BRIEFING 21 Transnational EU Programmes RELEASE DATE: APRIL 2012 Please direct any questions or comments regarding this paper to:

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1 thinking: BRIEFING 21 Transnational EU Programmes RELEASE DATE: APRIL 2012 Please direct any questions or comments regarding this paper to: New Economy Tel:

2 THINKING NEW ECONOMY: BRIEFING 21 Transnational EU Programmes RELEASE DATE: April 2012 SUMMARY: Greater Manchester (GM) has benefited significantly from a number of European funding programmes managed by different Directorates within the European Commission (EC). Many innovative projects have been seen across GM over the years with support from INTERREG programmes, the 7 th Framework Programme, the Competitiveness and Innovation Programmes, PROGRESS, the Lifelong Learning Programmes and many others. The final call of the current programmes will mainly be realised during summer and winter this year. The legislative proposals for the new programmes have now been published and they will be discussed by the Council and the European Parliament during , with legislation acts being adopted by mid All Programmes should start in January This paper sets out the EU transnational programmes which are relevant to GM and the opportunities that these may present. INTRODUCTION The current European Union funding programmes will end in 2013 and many GM stakeholders are wondering what will happen from The legislative proposals for the new financial period have now been published and they will be discussed by the Council and the European Parliament during There are three fundamental questions about the future proposals: how much funding is there?; how will it be spent?; and what opportunities are there for GM?. Figure 1 shows how the new programmes link to the priorities in the Greater Manchester Strategy (GMS). Figure 2 provides a summary of the new programmes and their successors. Figure 1: EU Programmes which could support GMS Strategic Priorities Horizon 2020 ( 80bn) Territorial Cooperation Programmes Interreg ( 11.7bn) Connecting Europe ( 50bn) Erasmus for All ( 15.21bn) LIFE ( 3.2bn) Competitiveness & SMEs COSME ( 2.38bn) Creative Europe ( 1.5) Better Life Chances Highly Skills Attracting Talent STRATEGIC PRIORITIES Transport Economic Base International Connectivity Env/CC HORIZON 2020 FRAMEWORK PROGRAMME FOR RESEARCH AND INNOVATION With over 80bn, Horizon 2020 (H2020) will be the largest European Transnational Programme post H2020 will replace two major programmes Framework Programme for Research (FP7) and the Competitiveness and Innovation Programme (CIP) and it will be implemented using a number of different funding instruments, in particular grants, prizes, procurement and debt finance and equity investment. The Programme will be delivered through three different priorities: excellence in the science base (26% of budget); industrial leadership and competitive framework (30%); and societal challenges (44%). Societal challenges will be a key component of H2020. R&D activities will cover the full cycle, from research to market. The focus will be on six particular challenges: health, demographics changes and well-being; food security and the bio-based economy; secure, clean and efficient energy; smart, green and integrated transport; transport and mobility in urban areas; climate change and resource-efficiency; 2

3 secure, clean and efficient energy; and innovative and secure societies. Sustainable development will be an overarching objective accounting for 60% of the total programme (of which 35% is expected to be allocated to climate change actions alone). 15% for Enabling and Industrial Technologies and Societal Challenges will be spent very much like the Small Business Innovation Research programme in the US ( This works through a competitive awards-based program, to allow small businesses to explore their technological potential and provides the incentive to profit from commercialisation. The intervention rate will rise to 100% for research actions and 70% for actions closer to market replication. The Smart Cities and Communities Scheme, which was launched last year, will continue under H2020. This will support the deployment of innovative low carbon technologies in urban settings. EUROPEAN TERRITORIAL COOPERATION (ETC) PROGRAMMES - INTERREG INTERREG is transnational ERDF funding. Out of the 376bn for economic, social and territorial cohesion (ERDF/ESF), 11.7bn will be allocated to INTERREG Programmes. Three types of INTERREG Programmes will be supported. One Interregional Cooperation Programme (the successor of INTERREG IVC) covering the entire EU and supporting networking activity to enhance the implementation of ERDF operational programmes. Several Transnational Cooperation programmes (the successors of INTERREG IVB). The North West (NW) of England is currently eligible for only two of the four INTERREG IVB programmes that are implemented in the UK: the Atlantic Area and the Northwest Europe. The geographical areas of the new B Programmes will be similar to the current Programmes. Several Cross-border Cooperation Programmes. The NW of England is not eligible for these. The NW of England is no stranger to INTERREG. The programmes have a significant allocation, the priorities are all relevant to the NW, and partners in the region are well experienced in the development and implementation of the projects. The major concern for the new period is that each INTERREG B Operational Programme will only be able to select four out of the 11 thematic objectives highlighted in the General ERDF/ESF Regulation. Solutions often need to be tackled from many different angles and this may be difficult to achieve if programmes are only limited to four priorities. There is a desire to introduce some geographical flexibility into the programmes by allowing non-eligible regions (even non-eu countries) to join or lead INTERREG projects, however how this will work in practice is not yet clear. There is also a desire to simplify the management of the projects and a staff salary flat rate of 15% of the direct cost has been introduced. This certainly needs clarification. Staff salary in most INTERREG B projects are often over 50% of the budget (for INTERREG C it is often much higher). Salary is also often used as match funding to the projects. Such a restriction on salary cost will certainly impact on the ability of GM partners to engage with the programme. CONNECTING EUROPE FACILITY (CEF) In the draft regulation for the Connecting Europe Facility the EC presents its ideas on how to accelerate the deployment of priority energy, transport and IT infrastructure projects by concentrating resources, simplifying and enhancing permission procedures and making use of innovative financial instruments. The fund will have an allocation of 50bn, of which 10bn will come from the Cohesion Fund to finance transport infrastructure projects in eligible Member States (the UK does not qualify). The greater share of the allocation will go to transport infrastructure: 31,7bn. The remaining funding will be split 9.2bn for telecommunication projects and 9.1bn for energy. 3

4 The money will serve primarily to finance the transport, energy and telecommunications priority corridors. The fund will provide grants for projects or support financial engineering instruments (loans, guarantees, investment funds, debenture loans) and it will be possible to combine both types of support. Co-financing rates will depend on the sector, type of project and geographic location. For transport, for example, studies can be co-financed at 50% and works at 20% (as a general rule, because the maximum can rise to 30% for projects aimed at reducing bottlenecks and 40% for cross-border sections of projects). Perhaps the biggest difference from the previous programme is the replacement of the Trans-European Networks (TENs) with the CEF, although how this will work in practice is not yet entirely clear the EC has indicated that the programme will operate through agencies (much like the current TENs programmes), but what and where these agencies will be is not yet certain. Another significant question is how projects outside the focus of the identified core network can be funded (if at all) under CEF. This will have a major impact on any opportunities for GM. ERASMUS FOR ALL Erasmus for All ( 15.21bn) will be the programme for education, training, youth and sport. It will bring together seven programmes from the existing Lifelong Learning Programme, Youth in Action, and five international cooperation programmes. It will be implemented through three key actions. Trans-national learning mobility (65%) mainly for students. Co-operation activities between education institutions (25%). Policy support to gather evidence on the effectiveness of education investments (4%). Two separate pillars for "Jean Monnet Initiative" and "Sport Action" will also be part of Erasmus for All. LIFE In addition to the three key actions, two new elements will be part of Erasmus for All: a loan guarantee scheme to help Master's degree students to finance their studies abroad; and the creation of 400 'knowledge alliances' (partnerships between higher education institutions and businesses) and 'sector skills alliances' (partnerships between education and training providers and businesses). Getting people from all backgrounds skilled and educated has been a key component of the current Leonardo and Grundtvig programmes. This strong social dimension of the current learning programmes is not as well reflected in the future programme. The clear focus of Erasmus for All is on learning mobility within higher education, which accounts for 25% of the budget. Vocational education, training and adult learning will total 17%, while youth and schools will have 7% of the budget each. LIFE is the European Programme supporting environmental and nature conservation projects. As per its predecessor (LIFE+) the Programme will comprise three priorities: biodiversity (50% of the budget); environment and resource efficiency; and environmental governance and information Three new sub-programmes ( 800m) have been introduced: climate change mitigation, climate change adaptation and climate governance and information. The co-financing rates have been increased from 50% to 70%. In turn, however, VAT and permanent staff not specifically recruited for a project will not be eligible. Existing staff are not only an important source of match funding to a project, but they are often best suited to work on a project. Excluding the related staff costs from funding could adversely affect how organisations engage with the programme. A new type of action will be introduced Integrated Projects to improve the implementation of 4

5 environment and climate policy on a larger territorial scale (regional, multi-regional, national). There will also be scope for supporting innovative financial instruments through the programme. COMPETITIVENESS OF SMES (COSME) With a planned budget of 2.5bn COSME will primarily focus on access to finance and support for the internationalisation of enterprises. The main beneficiaries will be: existing entrepreneurs (small businesses in particular); future entrepreneurs (including young people); and national, regional and local authorities (some support may be provided for the development and implementation of effective policy reform). 1.4bn will be allocated to financial instruments, while the remainder will be spent for financing the Enterprise Europe Network, international industry cooperation and entrepreneurship education. COSME claims to provide a much easier system for entrepreneurs and small businesses to access finance. The financial instruments will include both a debt and an equity facility. As regards the debt facility, EC will be providing enterprises and in particular SMEs with a Loan Guarantee Facility. The Loan Guarantee Facility will cover loans up to 150,000 with a minimum maturity of 12 months. This guarantee facility will be supplemented by other guarantee schemes supported by Horizon 2020, which will be accessible for more innovative SMEs with loan amounts of over 150,000. CREATIVE EUROPE With a proposed budget of 1.8bn, Creative Europe will be the programme to promote cultural and linguistic diversity in Europe. The new programme will consist of three strands: Culture, MEDIA and trans-sectoral strand. The new Programme will allocate more than 900 million in support of the cinema and audiovisual sector (area covered by current MEDIA programme) and almost 500 million for culture. The EC is also proposing to allocate more than 210 million for a new financial guarantee facility. Figure 2: New Programmes and their successors Horizon 2020 ( 80bn) Framework 7 th Programme Competitiveness & Innovation Territorial Cooperation Programmes Interreg ( 11.7bn) Connecting Europe ( 50bn) Erasmus for All ( 15.21bn) Northwest Europe Interreg VB TEN-T LIFE ( 3.2bn) LIFE + Lifelong Learning (Erasmus, Leonardo Comenius, Grundtvig, Jean Monnet) Atlantic Area Interreg IVB Interreg IVC URBACT and ESPON Tempus Youth for Action ALFA and EDULINK Competitiveness & SMES COSME ( 2.38bn) Competitiveness & Innovation (access to finance schemes) Entrepreneurship & Innovation Programme Creative Europe Culture MEDIA MEDIA MUNDUS 5